Intrinsic value of Denbury Resources - DNR

Previous Close

$2.73

  Intrinsic Value

$0.35

stock screener

  Rating & Target

str. sell

-87%

Previous close

$2.73

 
Intrinsic value

$0.35

 
Up/down potential

-87%

 
Rating

str. sell

We calculate the intrinsic value of DNR stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 1.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  48.20
  43.88
  39.99
  36.49
  33.34
  30.51
  27.96
  25.66
  23.60
  21.74
  20.06
  18.56
  17.20
  15.98
  14.88
  13.89
  13.01
  12.20
  11.48
  10.84
  10.25
  9.73
  9.25
  8.83
  8.45
  8.10
  7.79
  7.51
  7.26
  7.03
Revenue, $m
  1,674
  2,409
  3,372
  4,603
  6,138
  8,011
  10,250
  12,881
  15,920
  19,381
  23,269
  27,587
  32,332
  37,499
  43,080
  49,066
  55,447
  62,214
  69,359
  76,874
  84,756
  93,000
  101,606
  110,577
  119,916
  129,631
  139,730
  150,227
  161,135
  172,470
Variable operating expenses, $m
  4,047
  5,823
  8,151
  11,126
  14,836
  19,362
  24,775
  31,133
  38,479
  46,843
  56,241
  66,678
  78,147
  90,636
  104,125
  118,592
  134,015
  150,371
  167,640
  185,805
  204,854
  224,780
  245,582
  267,264
  289,836
  313,317
  337,728
  363,098
  389,463
  416,860
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  4,047
  5,823
  8,151
  11,126
  14,836
  19,362
  24,775
  31,133
  38,479
  46,843
  56,241
  66,678
  78,147
  90,636
  104,125
  118,592
  134,015
  150,371
  167,640
  185,805
  204,854
  224,780
  245,582
  267,264
  289,836
  313,317
  337,728
  363,098
  389,463
  416,860
Operating income, $m
  -2,373
  -3,414
  -4,779
  -6,523
  -8,698
  -11,351
  -14,525
  -18,252
  -22,559
  -27,463
  -32,972
  -39,091
  -45,815
  -53,136
  -61,045
  -69,526
  -78,568
  -88,157
  -98,281
  -108,931
  -120,099
  -131,780
  -143,976
  -156,687
  -169,921
  -183,686
  -197,998
  -212,872
  -228,328
  -244,390
EBITDA, $m
  -2,064
  -2,970
  -4,158
  -5,675
  -7,567
  -9,876
  -12,637
  -15,880
  -19,628
  -23,894
  -28,688
  -34,011
  -39,861
  -46,232
  -53,112
  -60,492
  -68,359
  -76,702
  -85,510
  -94,776
  -104,492
  -114,656
  -125,267
  -136,326
  -147,840
  -159,817
  -172,269
  -185,210
  -198,658
  -212,633
Interest expense (income), $m
  131
  167
  266
  400
  576
  800
  1,080
  1,422
  1,831
  2,311
  2,865
  3,497
  4,206
  4,994
  5,860
  6,803
  7,822
  8,914
  10,079
  11,314
  12,617
  13,989
  15,427
  16,932
  18,502
  20,139
  21,844
  23,616
  25,459
  27,375
  29,366
Earnings before tax, $m
  -2,539
  -3,679
  -5,179
  -7,098
  -9,498
  -12,431
  -15,947
  -20,083
  -24,870
  -30,328
  -36,469
  -43,297
  -50,809
  -58,997
  -67,848
  -77,348
  -87,483
  -98,236
  -109,595
  -121,548
  -134,087
  -147,208
  -160,907
  -175,189
  -190,060
  -205,530
  -221,614
  -238,331
  -255,703
  -273,756
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -2,539
  -3,679
  -5,179
  -7,098
  -9,498
  -12,431
  -15,947
  -20,083
  -24,870
  -30,328
  -36,469
  -43,297
  -50,809
  -58,997
  -67,848
  -77,348
  -87,483
  -98,236
  -109,595
  -121,548
  -134,087
  -147,208
  -160,907
  -175,189
  -190,060
  -205,530
  -221,614
  -238,331
  -255,703
  -273,756

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  6,618
  9,522
  13,330
  18,194
  24,261
  31,663
  40,515
  50,912
  62,926
  76,604
  91,973
  109,040
  127,796
  148,218
  170,277
  193,937
  219,158
  245,905
  274,145
  303,851
  335,002
  367,587
  401,605
  437,062
  473,975
  512,374
  552,294
  593,782
  636,896
  681,700
Adjusted assets (=assets-cash), $m
  6,618
  9,522
  13,330
  18,194
  24,261
  31,663
  40,515
  50,912
  62,926
  76,604
  91,973
  109,040
  127,796
  148,218
  170,277
  193,937
  219,158
  245,905
  274,145
  303,851
  335,002
  367,587
  401,605
  437,062
  473,975
  512,374
  552,294
  593,782
  636,896
  681,700
Revenue / Adjusted assets
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
Average production assets, $m
  6,043
  8,694
  12,171
  16,613
  22,152
  28,911
  36,994
  46,487
  57,456
  69,945
  83,978
  99,562
  116,687
  135,335
  155,476
  177,079
  200,108
  224,531
  250,316
  277,439
  305,883
  335,636
  366,696
  399,071
  432,776
  467,837
  504,287
  542,169
  581,535
  622,445
Working capital, $m
  -223
  -320
  -449
  -612
  -816
  -1,065
  -1,363
  -1,713
  -2,117
  -2,578
  -3,095
  -3,669
  -4,300
  -4,987
  -5,730
  -6,526
  -7,374
  -8,274
  -9,225
  -10,224
  -11,272
  -12,369
  -13,514
  -14,707
  -15,949
  -17,241
  -18,584
  -19,980
  -21,431
  -22,939
Total debt, $m
  4,919
  7,402
  10,658
  14,817
  20,004
  26,333
  33,902
  42,791
  53,063
  64,757
  77,898
  92,490
  108,526
  125,988
  144,848
  165,077
  186,641
  209,510
  233,655
  259,054
  285,688
  313,548
  342,633
  372,949
  404,510
  437,341
  471,472
  506,945
  543,807
  582,115
Total liabilities, $m
  5,658
  8,141
  11,397
  15,556
  20,743
  27,072
  34,641
  43,530
  53,802
  65,496
  78,637
  93,229
  109,265
  126,727
  145,587
  165,816
  187,380
  210,249
  234,394
  259,793
  286,427
  314,287
  343,372
  373,688
  405,249
  438,079
  472,211
  507,684
  544,546
  582,854
Total equity, $m
  960
  1,381
  1,933
  2,638
  3,518
  4,591
  5,875
  7,382
  9,124
  11,108
  13,336
  15,811
  18,530
  21,492
  24,690
  28,121
  31,778
  35,656
  39,751
  44,058
  48,575
  53,300
  58,233
  63,374
  68,726
  74,294
  80,083
  86,098
  92,350
  98,847
Total liabilities and equity, $m
  6,618
  9,522
  13,330
  18,194
  24,261
  31,663
  40,516
  50,912
  62,926
  76,604
  91,973
  109,040
  127,795
  148,219
  170,277
  193,937
  219,158
  245,905
  274,145
  303,851
  335,002
  367,587
  401,605
  437,062
  473,975
  512,373
  552,294
  593,782
  636,896
  681,701
Debt-to-equity ratio
  5.130
  5.360
  5.510
  5.620
  5.690
  5.740
  5.770
  5.800
  5.820
  5.830
  5.840
  5.850
  5.860
  5.860
  5.870
  5.870
  5.870
  5.880
  5.880
  5.880
  5.880
  5.880
  5.880
  5.880
  5.890
  5.890
  5.890
  5.890
  5.890
  5.890
Adjusted equity ratio
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -2,539
  -3,679
  -5,179
  -7,098
  -9,498
  -12,431
  -15,947
  -20,083
  -24,870
  -30,328
  -36,469
  -43,297
  -50,809
  -58,997
  -67,848
  -77,348
  -87,483
  -98,236
  -109,595
  -121,548
  -134,087
  -147,208
  -160,907
  -175,189
  -190,060
  -205,530
  -221,614
  -238,331
  -255,703
  -273,756
Depreciation, amort., depletion, $m
  308
  444
  621
  848
  1,130
  1,475
  1,887
  2,372
  2,931
  3,569
  4,285
  5,080
  5,953
  6,905
  7,932
  9,035
  10,210
  11,456
  12,771
  14,155
  15,606
  17,124
  18,709
  20,361
  22,080
  23,869
  25,729
  27,662
  29,670
  31,757
Funds from operations, $m
  -2,231
  -3,236
  -4,558
  -6,251
  -8,368
  -10,956
  -14,059
  -17,711
  -21,938
  -26,759
  -32,185
  -38,218
  -44,856
  -52,092
  -59,916
  -68,314
  -77,273
  -86,780
  -96,824
  -107,393
  -118,481
  -130,083
  -142,198
  -154,828
  -167,979
  -181,661
  -195,885
  -210,669
  -226,033
  -241,998
Change in working capital, $m
  -72
  -98
  -128
  -164
  -204
  -249
  -298
  -350
  -404
  -460
  -517
  -574
  -631
  -687
  -742
  -796
  -849
  -900
  -950
  -1,000
  -1,048
  -1,096
  -1,145
  -1,193
  -1,242
  -1,292
  -1,343
  -1,396
  -1,451
  -1,508
Cash from operations, $m
  -2,158
  -3,138
  -4,429
  -6,087
  -8,163
  -10,707
  -13,761
  -17,361
  -21,534
  -26,299
  -31,667
  -37,643
  -44,225
  -51,405
  -59,173
  -67,518
  -76,424
  -85,880
  -95,873
  -106,394
  -117,433
  -128,987
  -141,054
  -153,635
  -166,737
  -180,369
  -194,542
  -209,273
  -224,582
  -240,491
Maintenance CAPEX, $m
  -208
  -308
  -444
  -621
  -848
  -1,130
  -1,475
  -1,887
  -2,372
  -2,931
  -3,569
  -4,285
  -5,080
  -5,953
  -6,905
  -7,932
  -9,035
  -10,210
  -11,456
  -12,771
  -14,155
  -15,606
  -17,124
  -18,709
  -20,361
  -22,080
  -23,869
  -25,729
  -27,662
  -29,670
New CAPEX, $m
  -1,965
  -2,652
  -3,477
  -4,442
  -5,539
  -6,758
  -8,083
  -9,493
  -10,969
  -12,489
  -14,033
  -15,584
  -17,126
  -18,648
  -20,142
  -21,603
  -23,029
  -24,422
  -25,785
  -27,123
  -28,443
  -29,753
  -31,060
  -32,375
  -33,705
  -35,061
  -36,450
  -37,882
  -39,366
  -40,910
Cash from investing activities, $m
  -2,173
  -2,960
  -3,921
  -5,063
  -6,387
  -7,888
  -9,558
  -11,380
  -13,341
  -15,420
  -17,602
  -19,869
  -22,206
  -24,601
  -27,047
  -29,535
  -32,064
  -34,632
  -37,241
  -39,894
  -42,598
  -45,359
  -48,184
  -51,084
  -54,066
  -57,141
  -60,319
  -63,611
  -67,028
  -70,580
Free cash flow, $m
  -4,331
  -6,098
  -8,350
  -11,150
  -14,550
  -18,596
  -23,319
  -28,742
  -34,875
  -41,719
  -49,269
  -57,511
  -66,430
  -76,006
  -86,220
  -97,053
  -108,488
  -120,512
  -133,114
  -146,288
  -160,031
  -174,346
  -189,238
  -204,719
  -220,803
  -237,510
  -254,861
  -272,885
  -291,610
  -311,071
Issuance/(repayment) of debt, $m
  1,835
  2,483
  3,256
  4,159
  5,187
  6,329
  7,569
  8,890
  10,271
  11,695
  13,140
  14,592
  16,036
  17,462
  18,860
  20,229
  21,564
  22,869
  24,145
  25,398
  26,634
  27,860
  29,085
  30,316
  31,561
  32,831
  34,132
  35,473
  36,862
  38,308
Issuance/(repurchase) of shares, $m
  2,851
  4,100
  5,731
  7,804
  10,377
  13,505
  17,230
  21,590
  26,612
  32,311
  38,698
  45,772
  53,529
  61,958
  71,047
  80,779
  91,140
  102,114
  113,690
  125,856
  138,604
  151,932
  165,840
  180,330
  195,412
  211,098
  227,403
  244,347
  261,954
  280,252
Cash from financing (excl. dividends), $m  
  4,686
  6,583
  8,987
  11,963
  15,564
  19,834
  24,799
  30,480
  36,883
  44,006
  51,838
  60,364
  69,565
  79,420
  89,907
  101,008
  112,704
  124,983
  137,835
  151,254
  165,238
  179,792
  194,925
  210,646
  226,973
  243,929
  261,535
  279,820
  298,816
  318,560
Total cash flow (excl. dividends), $m
  354
  485
  637
  813
  1,014
  1,237
  1,480
  1,738
  2,008
  2,286
  2,569
  2,853
  3,135
  3,414
  3,687
  3,955
  4,216
  4,471
  4,721
  4,966
  5,207
  5,447
  5,686
  5,927
  6,170
  6,419
  6,673
  6,935
  7,207
  7,489
Retained Cash Flow (-), $m
  -2,851
  -4,100
  -5,731
  -7,804
  -10,377
  -13,505
  -17,230
  -21,590
  -26,612
  -32,311
  -38,698
  -45,772
  -53,529
  -61,958
  -71,047
  -80,779
  -91,140
  -102,114
  -113,690
  -125,856
  -138,604
  -151,932
  -165,840
  -180,330
  -195,412
  -211,098
  -227,403
  -244,347
  -261,954
  -280,252
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  -2,496
  -3,615
  -5,094
  -6,990
  -9,363
  -12,267
  -15,751
  -19,852
  -24,604
  -30,025
  -36,129
  -42,919
  -50,394
  -58,544
  -67,359
  -76,824
  -86,924
  -97,643
  -108,969
  -120,890
  -133,397
  -146,486
  -160,154
  -174,404
  -189,242
  -204,679
  -220,730
  -237,412
  -254,748
  -272,763
Discount rate, %
  12.20
  12.81
  13.45
  14.12
  14.83
  15.57
  16.35
  17.17
  18.02
  18.93
  19.87
  20.87
  21.91
  23.00
  24.16
  25.36
  26.63
  27.96
  29.36
  30.83
  32.37
  33.99
  35.69
  37.47
  39.35
  41.31
  43.38
  45.55
  47.83
  50.22
PV of cash for distribution, $m
  -2,225
  -2,841
  -3,489
  -4,121
  -4,690
  -5,148
  -5,457
  -5,590
  -5,536
  -5,305
  -4,920
  -4,416
  -3,836
  -3,225
  -2,624
  -2,064
  -1,570
  -1,154
  -819
  -560
  -369
  -235
  -143
  -84
  -47
  -25
  -13
  -6
  -3
  -1
Current shareholders' claim on cash, %
  30.6
  9.6
  3.0
  1.0
  0.3
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Denbury Resources Inc. is an independent oil and natural gas company. The Company's operations are focused in two operating areas: the Gulf Coast and Rocky Mountain regions. Its properties with proved and producing reserves in the Gulf Coast region are situated in Mississippi, Texas, Louisiana and Alabama, and in the Rocky Mountain region are situated in Montana, North Dakota and Wyoming. It had an estimated proved oil and natural gas reserves of 254.5 million barrels of oil equivalent (MMBOE) as of December 31, 2016. Its primary Gulf Coast carbon dioxide (CO2) source is Jackson Dome, which is located near Jackson, Mississippi. Its mature group of properties includes the initial CO2 field, Little Creek, and other fields, including Brookhaven, Cranfield, Eucutta, Lockhart Crossing, Mallalieu and Soso fields. Its LaBarge Field is located in southwestern Wyoming. Its Riley Ridge Federal Unit is located in southwestern Wyoming and produces gas from the same LaBarge Field.

FINANCIAL RATIOS  of  Denbury Resources (DNR)

Valuation Ratios
P/E Ratio -1.1
Price to Sales 1.1
Price to Book 2.3
Price to Tangible Book
Price to Cash Flow 5
Price to Free Cash Flow -32
Growth Rates
Sales Growth Rate -22.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -55%
Cap. Spend. - 3 Yr. Gr. Rate -27.4%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 621.8%
Total Debt to Equity 639.5%
Interest Coverage -11
Management Effectiveness
Return On Assets -17.6%
Ret/ On Assets - 3 Yr. Avg. -19.2%
Return On Total Capital -24.4%
Ret/ On T. Cap. - 3 Yr. Avg. -26.8%
Return On Equity -113.7%
Return On Equity - 3 Yr. Avg. -76.1%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 104.6%
Gross Margin - 3 Yr. Avg. 103.6%
EBITDA Margin -55.6%
EBITDA Margin - 3 Yr. Avg. -143.5%
Operating Margin -129.8%
Oper. Margin - 3 Yr. Avg. -201.7%
Pre-Tax Margin -155.7%
Pre-Tax Margin - 3 Yr. Avg. -205.5%
Net Profit Margin -100%
Net Profit Margin - 3 Yr. Avg. -140.8%
Effective Tax Rate 35.8%
Eff/ Tax Rate - 3 Yr. Avg. 34.8%
Payout Ratio 0%

DNR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the DNR stock intrinsic value calculation we used $1129.786 million for the last fiscal year's total revenue generated by Denbury Resources. The default revenue input number comes from 0001 income statement of Denbury Resources. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our DNR stock valuation model: a) initial revenue growth rate of 48.2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 12.2%, whose default value for DNR is calculated based on our internal credit rating of Denbury Resources, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Denbury Resources.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of DNR stock the variable cost ratio is equal to 241.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for DNR stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Denbury Resources.

Corporate tax rate of 27% is the nominal tax rate for Denbury Resources. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the DNR stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for DNR are equal to 360.9%.

Life of production assets of 19.6 years is the average useful life of capital assets used in Denbury Resources operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for DNR is equal to -13.3%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $648.165 million for Denbury Resources - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 460.637 million for Denbury Resources is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Denbury Resources at the current share price and the inputted number of shares is $1.3 billion.

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COMPANY NEWS

▶ Natural-Gas Prices Are Falling After a Record High   [Nov-15-18 01:35PM  Barrons.com]
▶ Denbury Resources Inc. Rebound Hit a Speed Bump in Q3   [Nov-08-18 11:36AM  Motley Fool]
▶ Denbury Resources: 3Q Earnings Snapshot   [06:46AM  Associated Press]
▶ Denbury Reports Third Quarter 2018 Results   [06:30AM  GlobeNewswire]
▶ 5 Bullish Stocks For Tuesday's Trading   [Nov-06-18 10:22AM  Benzinga]
▶ Houston upstream energy co. to be acquired by Plano co. for $1.7B   [08:00AM  American City Business Journals]
▶ 5 of the Best Stocks Under $10 for 2018   [Oct-03-18 02:51PM  Zacks]
▶ Penny Stocks to Watch for September 2018   [Aug-31-18 02:44PM  Investopedia]

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